Hey Everyone,
I'll try to respond to all of your questions:
1) Housing: I work from home, and we do have a bit of an expensive home, we paid $520K and owe $320K. I'd love to pay it off, but I don't have $320K. Also, we live in CA, and my property taxes are $5K / year! So yes, I agree with everyone, housing is my big one. I'll have to think about this. I just don't think we are going to move any time soon.
2) Vitamins: Yes, these are medically necessary for me (unfortunately). That vitamins category is inclusive of some other treatments I need to do after a long bout with a nasty health condition which is fortunately 99% gone now.
3) Cars: Wife's car gets 13 miles/gallon, mine 17, so could definitely improve here. Reason I don't sell cars and get better gas mileage cars: I have this paranoia about wife driving around with kids in a tiny car and getting broadsided by an F-350. Anyone else worry about that?
4) Grocery: I definitely see this as a place we will be working to improve
5) Health / car / home insurance: all of these are very bloated and I'll be putting some energy into fixing. $1320/yr home, $1600/year for 2 cars, $850/mo health. I think I can probably cut these by 30%.
6) Yes, some of my savings are tax advantaged but if we are to live the MMM way, we need money before 60, right? I am 33 years old and have a hard time putting money away that I can't touch for 27 years.
7) We have 2 kids, so yes, the grocery bills are out of hand. We unfortunately live in a small mountain town and don't have costco, walmart, have to drive 45 minutes to get to them, so buy groceries at a small retail store.
Right now here is our 'Stache:
- $60K in cash
- $20K in I-Bonds (basically same as cash)
- $8K in a health savings account HSA
- $10K in my SEP-IRA
- $7K in taxable trading account
I am making some steps toward lowering monthly expenses, such as, re-fi'ed primary mortgage saving $135/month, hopefully can save $300 / month by shopping around insurances, talking about grocery plan with wife who does shopping, etc.
I think, though, that even after all the changes I could make, you are right, Ben, that my housing costs are enormous. If I wanted to truly do the Mustachian way, I'd need to pay off mortgage or downsize. Or better yet, move the heck out of this town to a cheaper place. Problem is, I've lived here for 28 years, family is here, and my backup career is here in case my current self employment situation doesn't work out.
The nice thing about life at this time is that I do work from home and I have a very flexible schedule, so the drive to retire early isn't as strong with me, because I see my family a lot already. Huge blessing. However, what I want to be able to do is tame the monster of spending, start investing more, and start to begin to cover some of my expenses with passive income.
RE: Investing: Am I crazy to be considering putting $20K into AGNC right now, a REIT that pays 16%? Would be $350 or so / month passive income. But diversified. I'm completely new to investing. My dad has owned real estate for years, so I'm a lot more comfortable with that route of investing, and in fact I have a real estate license. But real estate in my city makes no sense, it is very expensive with low rents. I'm sort of considering buying a rental house in Oklahoma, cost $50K and rents are 700/mo. Leverage part of purchase to achieve cash flow of $200/month and let the tenant pay off the mortgage in 15 years.
Thanks for listening ... any and all thoughts welcome! Don't go easy on me!
-theskyking